Methods of Addressing Saving Inequity

Plan sponsors with diverse workforces have an opportunity to offer innovate benefits that can address equity issues, including the retirement wealth gap and access to financial wellness solutions, across race and gender through their plans, according to panelists at the PLANSPONSOR National Conference in Chicago.

Options at Thursday’s panel, “Equity in Retirement Benefits,” ranged from plan design decisions to providing benefit details in many different languages, but a key element all mentioned was knowing your participant pool and having the information to address their needs.

In part to address that need for understanding the equity issues, Pam Hess, executive director of the DCIIA Retirement Research Center, noted a recent collaboration the group did with the Aspen Institute Financial Security Program and Morningstar Retirement to create a dataset, controlling for salary and tenure, that revealed substantial savings gaps.

“When you look at a 55-year-old Black woman versus a white man [of the same age], the Black woman has 36 cents of the dollar saved compared to the white man, controlling for salary [and] tenure,” Hess said. “Those are big gaps.”

Sal Naidoo, deputy managing director at SEIU 775 Benefits Group, which provides retirement benefits to home care workers in Washington state, said his team has been focused on addressing the systemic barriers that workers face to accessing retirement savings.

Naidoo said the union’s employees work, on average, around 114 to 117 hours per month, often face volatility in the hours. The majority of its population are workers of color, first generation immigrants and non-English speaking caregivers.

To serve this diverse population, Naidoo said the group’s plan design includes automatic enrollment for both full and part-time caregivers and provides 100% immediate vesting after completing six months of service. The tactic gets employees into the plan and saving within the early stages of the job.

SEIU also recently introduced in-service distribution options, allowing workers to take distributions while they work to address short-term spending needs, particularly for those who may need to work beyond age 65 but still need access to savings.

“What it boils down to is understanding what the workforce looks like,” Naidoo said. “We only get a certain amount of information from our recordkeeper.”

He said SEIU’s current project includes conducting a demographic survey, asking workers to voluntarily provide information like whether they are a member of the LGBTQ+ community, how many generations are in their household and other specific information in order to better understand the plan participants’ needs.

In addition, Naidoo said SEIU translates all of their plan materials into at least eight different languages and provides five fully translated participant portals.

Beth Pattillo, director of retirement and financial wellness program at Leidos Inc.—a defense, aviation, information technology and biomedical research company headquartered in Reston, Virginia—said her plan has been on a “journey of data collection.”

Despite representing a highly educated and well-compensated population, Pattillo said the company found through a financial wellness survey that people had high levels of financial stress and could not afford $400 emergency expenses.

By delving into participant data, Pattillo also found that while the overall employee contribution rate was 11.2%, Black and Hispanic workers were only contributing between an average of 3% to 5% at younger ages. 

In addition to conducting more surveys, Pattillo said the plan is looking into offering auto enrollment, as well as putting in a non-elective contribution for people who earn less than $90,000 a year.

“A lot of this is about education and data, and we’re just trying to figure out how we can meet people where they’re at,” Pattillo said.

She said the plan is also trying to change the tone of its communications to avoid negative participant reactions. Telling people constantly that they’re not contributing enough to meet the match can make employees feel inadequate, she argued, and it is better to remind employees about the breadth of the company’s benefits offerings, including the plan, in addition to the match.

Pattillo added that Leidos leverages after-tax offering as a way for people to build emergency savings. The company also launched a modified student loan repayment offering in 2020 and is exploring retirement income solutions in 2024.  

“The engagement isn’t always where we want it to be, but what we have found is that those that engage are so passionate about the services we have been providing,” Pattillo said.